Bigger worries than oil prices
Petrol prices are creeping up again. At a pump I pass most days I noticed that a queue builds up most mornings and vanishes in the afternoon.
Then I spotted, as the queuing motorists had already, that the place has a habit of putting up the price at lunchtime.
It is not the only one, either. The AA reported yesterday that retail petrol prices have risen to an average of 90.1p from 85.89p on January 6 – five per cent in as many weeks.
Well, what is so terrible about that? Most of us have bigger worries just now. Anyway it is years since the stuff was this cheap.
More to the point, it is doubtful how much sense it makes to pump much more out of the North Sea at prices under $60 a barrel or so as opposed the present $40.
Any sustained return to dirt cheap oil makes economic nonsense, too, of all the “green” talk about the low carbon economy of the future.
In the great scheme of things, we should be welcoming rather more expensive oil –while recognising the malign consequences of the bubble that drove the price to $147 last July.
You could argue that it turned an Anglo-Saxon banking scandal into the present recession global.
That said, the lesser scheme of things is unsettling.
It fits badly with the notion that the Bank of England can counter this recession as no recession has been countered before by all-but abolishing interest rates.
We can no longer be quite so sure that deflation, not inflation, is the big bogey now.
Look at what happened to British industry’s prices last month.
“Input” costs of fuel and raw materials which rocketed throughout most of 2007 and 2008, subsided mercifully in the final months of last year.
But between December and January they jumped by 1.5 per cent – due overwhelmingly, yes, to the rising price of crude oil.
Tough on manufacturers, you may say, but the way things are they cannot pass the cost on to us. There is too much competition.
Sure enough, factory gate prices crept up by no more than 0.1 per cent in January.
The official explanation is less reassuring.
The increase mainly reflected “rises in the cost of food, other manufactured products and transport equipment products being partly offset by a falling petroleum product prices”.
These falling petrol and diesel prices must have been based on the cost of crude from which they were refined – a few weeks earlier when crude stood at $36. North Sea Brent has now shot up to $48, although the New York price is about $6 less.
That still makes oil cheap, just not dirt cheap any more.
It would be fine except that the price of pretty well everything else is still steaming ahead – recession or no recession.